Metcash agrees $165 million deal for Home Timber & Hardware

The hardware giant might have seen off Masters but there is a new $2 billion competitor coming.

Ravenshoe Home Timber & Hardware. Picture: Jackson Miller

WOOLWORTHS is selling its Home Timber & Hardware business to Mitre 10 owner Metcash for $165 million.

Metcash said on Wednesday it will fund the purchase with an $80 million institutional placement and another $85 million of debt from its current lenders, and expects to complete the deal in October.

The IGA supermarket supplier said the purchase of the hardware wholesaler and retailer will give it a combined network of about 1,800 stores generating about $2 billion in annual sales.

It expects the acquisition to be earnings accretive by 2017/18.

“This increased scale, together with the opportunity to realise significant efficiencies, will enable us to be more competitive and deliver a better outcome for both our hardware retailers and their customers,” Metcash chief executive Ian Morrice said.

“Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long term.”

The Australian Competition and Consumer Commission had raised concerns about Metcash taking control of Home Timber, Mitre 10’s only rival as a full-service wholesale option for independent hardware and home improvement retailers.

But the competition watchdog cleared the bid after Metcash promised to let independent stores buy products from other sources.

The supermarket giant will on Thursday release its annual financial results, which will include a previously announced $3.25 billion writedown related to the closure of its Masters hardware stores.

Masters, a joint venture with US retailer Lowe’s, failed to unsettle the dominant Bunnings chain, which is owned by Woolworths’ fierce rival Wesfarmers. Shares in Woolworths and Metcash were both in a trading halt on Wednesday.